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Need to Know
JUNE 18, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Today could mark the sixth consecutive session of 100-point swings on the
Dow, which has only happened six other times. The record was set back in
October 2008, when the index endured such fluctuations for 10 straight
days, according to Bespoke Investment Group .
With investor hypersensitivity in full pulse-pounding bloom, we could
eclipse that mark by next week. Stocks are setting up for a pop to the
upside as the Fed meeting gets underway. For better or worse, that's all
that seems to matter at this point.
"Gone, at least for now, are the days when economic and corporate
fundamentals dictate market performance," says investment adviser Eric Parnell .
"Instead, the outlook for financial markets in the months ahead
essentially comes down to the verbiage and potential policy actions
resulting from a single a policy meeting."
For those of you paralyzed by fear of the Fed's next move, I offer the
comforting embrace of Nouriel Roubini and Ian Bremmer. The two penned a piece in which they said the
Fed's exit "will be treacherous" either way. "Exiting too
fast will crash the real economy, while exiting slowly will first create a
huge bubble and then crash the financial system." In other words,
crash if they do, crash if they don't.
There. Isn't that better?
Key market gauges: Futures on the Dow and the
S&P are are moving higher in the wee hours, after the Nikkei
couldn't find its footing in yet another choppy session . Europe
is mostly range-bound, with the FTSE 100 the biggest winner
among the major indexes.
Gold is pushing fractionally lower early as investors take a cautious stance ahead of the Fed
meeting. Crude oil is also in stall mode for the most part, hovering
around flat territory. On the currency front, the euro breached its highest
level since back in February.
The economy: With the two-day Federal Reserve meeting
grabbing all the attention this week, new U.S. home construction and
consumer inflation numbers will sneak in today at 8:30 a.m. Eastern. The
former is expected to have risen to an annual rate of 953,000 in May from
853,000 in April while the consumer price index is forecast to come in at a
seasonally adjusted 0.2%. Read: Spotlight on economy .
Watch the SPDR Homebuilders ETF for any reaction to the upcoming
data. The gauge has been on fire amid the housing recovery, surging more
than 50% in the past year. The sector got another boost on Monday as
home-builder confidence turned positive for the first time in
seven years.
The buzz:Dan Loeb is a hot topic on Google after the
hedge-fund investor penned another letter to Sony Corp.
as part of his ongoing campaign to push the company toward IPOing its
entertainment division.
Netflix holds the top spot on the StockTwits trending list. The stock
tacked on more than 7% after the company, in a shot across the bow of rival
Amazon , announced a new deal with DreamWorks
Animation .
With the "biggest ever" Paris Air Show
taking flight, both Boeing and Raytheon are also trending. Read more on Airbus, Boeing rivalry .
On the sparsely-populated earnings calendar, Adobe , FactSet and
La-Z-Boy all report today. Read: Stocks to watch .
The chart of the day:Bill Luby from the VIX and more blog offers up historical
hints of what to expect from the volatility gauge in the days
surrounding the Fed meeting. "There is no reason to expect that
patterns which have persisted for the past 33 years to magically reappear
for each FOMC announcement going forward, but I do believe that the
historical pattern does say something about human nature, uncertainty and
perceptions of risk," he wrote. If these trends hold any water,
there are worse ideas than going long the VIX on Monday.
The
call of the day: Japan is stealing all the
headlines from Asia lately, but the smart money should take a hard look at
South Korea , according to Goldman Sachs. "The inevitable jitters
regarding QE tapering are not likely to impact Korean equities as
much," the strategists wrote. "Note the outperformance of
Korea during the recent selloff." Aside from China, Goldman says Korea
is the cheapest market from a P/E and price-to-book perspective. Further
proof that South Korea could be the "it" country came from Mark
Zuckerberg. The Facebook boss ditched the hoodie and donned a suit to meet with President Park Guen Hye .
Random reads: The ingenious beer glass that may save humanity and armor
that may save a guinea pig , both brought to
you by BuzzFeed.
Happy birthday to me, here's your copy of "Mein Kampf" .
A glimpse into Vladimir Putin's thug life , including the
time he stole Bob Kraft's Super Bowl ring after saying "I could kill
someone with this."
TechCrunch on "nerds and underdogs" and why "Silicon Valley
is suffering from an acute fallacy of composition ."
A shark attack... in Texas ?
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